Until this summer, longtime guitarist and songwriter Lucas Sommer
had been operating a music studio in Miami assisting fellow
independent musicians with writing and producing songs. Sommer
spotted a business opportunity after a number of the artists
began picking his brain about how to get exposure and sell their
music. Sommer wanted to find a way to build an online business
that would help musicians become more successful.

The concept struck a chord. In June, Sommer launched Audimated,
an online marketplace for artists and their fans to discover and
promote their music. The company helps artists by selling
promotional services and digital distribution of music to online
sellers such as iTunes, Rhapsody and eMusic. Aside from those
standard offerings, artists can also create profiles on the site
so fans can discover their music and help spread the word. The
site also allows fans to set up an online storefront promoting
their favorite artists, and when their friends buy the promoted
music, fans receive a commission.

While his business is designed to solve the challenges facing
musicians, Sommer grappled with his own start-up issues. Here,
Sommer shares his three toughest obstacles and how he overcame
them.

Challenge No. 1: Assembling the right
team. We originally outsourced Audimated's web development
team but that proved to be a huge mistake. The interface lacked
the features and functionality we needed. As a result, people
didn't know how to use the system and the website loaded slowly
because of inferior and unorganized code. Quality control was an
issue because the contractor was motivated to deliver quickly
instead of delivering the best product possible.

Solution: We opted to bring on a long-term
engineering team to manage web and product development and
offered them incentives. For example, we offered them a few
percentage points of equity in Audimated based on milestones tied
to company growth. The result has been a highly motivated core
team.

Challenge No. 2: Landing startup
capital. After finalizing what I felt was a strong business
plan, the next step was to begin pitching investors. I didn't
personally have the capital or development skills needed to get
the project going. I estimated that I would need about $50,000 to
get the website developed and our legal needs satisfied.

But the investors I was speaking with weren't interested. I
realized my presentation was too detailed and that I was pitching
people who weren't in the right social or financial situation to
invest in an online start-up.

Solution: I continued to network and meet new
people, targeting investors whose vision aligned with Audimated's
mission. I also kept refining my pitch and attended local
entrepreneurship events. Before and after these events, I made it
a point to approach potential investors who identified themselves
as being in the entertainment or music businesses. Instead of
pitching Audimated up front, I'd request a more formal follow-up
meeting at a later time. Eventually I met an individual who was
willing to give us the startup capital in exchange for a minority
ownership stake.

Challenge No. 3: Scaling the
business. Scaling Audimated is a constant challenge because
the majority of our users are not paying to use the service. We
spend marketing dollars on Facebook and Google advertisements as
well as search-engine optimization to drive users to the site,
but those users do not provide enough revenue to offset those
costs. This makes it difficult to scale in the short term because
the more users we get the more money we lose.

Solution: Audimated started small and is growing
slowly by allocating limited marketing dollars to social media
and search engines, and to deliberately controlling user growth.
We decided not to over-spend on marketing and drive millions of
people to our business in an effort to control the quality of our
service. For example, during our first month we experienced a
traffic surge that crashed our servers. We had to migrate our
data to a host that could handle our increasing traffic and allow
us to grow.

The lesson we learned is to stay focused on providing a valuable
service to a small number of customers that we can manage,
measure and serve properly. Once the resources are in place and
the service is perfected, we will start to scale business growth
with the knowledge and confidence to do it successfully.